McKinsey & Company Operations Management - Essay Example

LOGISTICS AND OPERATIONS MANAGEMENT/SUPPLY CHAIN MANAGEMENT s Introduction McKinsey & Company is a world class management consulting firm that helps the global leading governments, organizations and corporations to redesign their strategic challenges and opportunities. The firm offers advisory services to senior management of various companies on critical growth and competitive issues after conducting an overall, fact and independent based assessment of each client’s performance. In this line, the firm offers a variety of services that include business building, structure and performance management, customer and operations management, organizational change and advisory services on acquisitions and mergers. Moreover, it also provides advisory services on best sourcing strategies, lean retailing, cost reduction, pricing, and network and revenue management (“McKinsey & Company”). Every business organization must master its industry and environment fully if it has to succeed in a given industry. Organizations need to keep record of regulatory changes, competitive dynamics and technological advancements within an industry for the purposes of competing and thriving in an industry. For example, brainpower and technology have been applied by numerous companies for purposes of improving their supply chain performance. The emergence of point-of-scale scanners has allowed numerous companies to capture the voice of customers. Data interchange that is electronic has allowed all supply chain stages to listen to customer voices and react accordingly through the use of rapid logistics, automated warehousing and flexible manufacturing thus making McKinsey & Company not to be an exception. McKinsey & Company consultant’s draws their achievement from many years of direct experiences in frontline as well as deeper understanding of their industry to ensure success of their clients’. Functional disciplines that are excellent can break or make organization’s capability to keep up with change. From the McKinsey & Company operations to strategy, they are committed to help their clients to boost their performance and improve on their functioning skills. Thus, the purpose of this paper is to describe the strategy, architecture, performance assessment metrics, infrastructure, technology and process of McKinsey& Company’s supply chain. In addition to that, the paper will document the perfect DNA for its supply chain and the reason for particular DNA proposal. McKinsey & Company Architecture McKinsey & Company human resource management is very responsible for defining the architecture of the organization. McKinsey & Company developed seven significant organizational components that would enable the effective operation of the organization as a management and consultation firm. The architecture of the company comprises of elements such as structure, strategy, systems, style, shared values and skills (Karlof, 1993, p.64). The company uses the seven models to function properly and effectively. So, it ensures that these components are aligned and mutually reinforcing. Strategy is the route that an organization chooses for its growth in future. Thus, it formulates a plan for purposes of gaining a competitive advantage that is sustainable. Structure is the framework that organization members’ activities are coordinated whilst system is the informal and formal procedures which comprise of innovation systems, allocation system, information management systems and compensation systems that governs an organization every day activities. On the other hand, style is the top management leadership and overall management approach that an organization adopts. In addition to that, it is the manner in which the employee’s of an organization carry themselves to the outside environment, customers and suppliers. Skills are what are done best by the company. For instance, the company’s distinctive competences, and capabilities that reside within the organization. Shared values are the guiding principles and concepts of an organization. It also comprises of the fundamental ideas within which the business is founded and the things that motivates staff to work together for an aim that is common (Richards, 2009, p.1). The above model helps the organization to understand how elements in an organization are interrelated and how the impact on changes in one area of an organization is taken into consideration. The company uses the seven model to analyze the company’s current situation and also in identifying gaps and inconsistencies that exists among them. According to Singh (2005, p.96), there exists a consensus among futurists that the only institution that is capable of providing effective world stewardship is the business organizations. In effect, attention is diverted towards mapping the economies and businesses performance in which they operate. Practitioners and academics have come to a consensus that, the landscape of a business will be extremely distinct as majority of the companies are shifting away from the traditional perceptive of an enterprise as an entity that is, independent and separate towards a model that is more corporative where interconnectivity is emphasized on. Managers have recognized that a crucial role will be played by a supply chain as it will help sustain an enterprise profitability and growth by necessitating companies to be more adaptable and flexible. Thus, the companies that are merging or in acquisition will greatly benefit from the IT architecture provided by the McKinsey & Company as part of the component in the seven models. As a matter of fact, advances in technology in sectors such as information technology, manufacturing and communication will inflame supply chain evolvement. For instance, there will be businesses total connectivity whereby businesses will behave like organisms. This means that, the assembling and disassembling will occur rapidly, ramping down or up to adapt to a continuously changing environment. Incorporating of IT infrastructure in an organization will enhance information sharing making an organization to perform effectively and efficiently hence the importance of outsourcing. In the light of the above, some individuals argue that outsourcing will dramatically increase. However, it will result to some loss of coordination and control thus impacting on an organization ability to rapidly design brand new products. This will create a problem in an era of fast-paced and significant technological advancement where rapid service and product innovation are mandatory to remain competitive in the market. On the contrary, communications and technology advances will enable the supply chains to operate more efficiently in the future. In addition to that, outsourcing is efficient for providing solutions to challenges being faced by organization. McKinsey & Company strategy Most of the time company struggles with their planning and strategic management processes. Most of them find it a bit challenging to incorporate tactical moves that are short term with strategic goals that are long-term. In addition to that, they always have difficulties in building the needed capacities for strategies execution. McKinsey Company supports companies in strengthening their development strategy processes thus enhancing their strategic decision-making and in improving their execution. In that case, they help companies in designing solutions that are tailored to issues that are specific. Alternatively, they help companies fully redesign their planning and strategic management approach. To achieve its goals, McKinsey & Company uses various strategies. For instance, it uses McKinsey’s resource reallocation diagnostic tool that helps the company in assessing the reallocation history of the client and the limitations it has encountered in their attempt to shift budget priorities. The tool allows the company to evaluate both the external and internal clients’ present performance in comparison to other companies’ quantitative level. Furthermore, the company works hand in hand with their clients to perform a deeper qualitative and quantitative assessment via the use of structured interviews and surveys. Another tool relied on by the company is the strategic management architecture. It offers an approach that is integrated to strategic decision making. Hence, enabling clients to improve on their analytical rigor and generate the needed insights to tackle strategic challenges or effectively exploit opportunities. Lastly, the company uses tools such as decision challenger and decision process designer. The later allows clients to systematically redesign or design the routinely used processes in decision making. The decisions made are often used to drive and aggregate the strategy and performance of the company. Sodhi (2003, p.70) argues that, even though formulation of a business-strategy also uses framework and tools, it needs a lot of creativity than planning that is tactical. This is because; shareholder value optimum way to maximization is seldom obvious. It takes creative and un-coerced negotiations to understand agree and identify possible actions. It is obvious that current managers face an environment that is extremely dynamic and requires nimble management and vigilant scrutiny practices. The senior strategy executives to be precise have comprehended the need to effectively manage uncertainty in the development of business strategy through adaptive and flexible strategic practices of management. This needs an on-going dialogue on issues that are strategic as well as the need to come up with a new strategic plan. Thus, despite McKinley& Company’s utilizing various tools to help their company in strategic management, there is need for creativity in comparison to tactful planning. Tactical planners have the capability of identifying possible factors and decisions that can be used to incorporate some elements in software development. As such, they can use optimization models that depend on mathematical techniques. These models are significant in making recommendations that minimizes costs and supports companies in meeting demands that are focused without exceeding distribution and production capacity. McKinsey & Company Infrastructure Organization infrastructure helps in supporting the needs and requests of a business. Nevertheless, the correlation between actual needs of a business and the infrastructure of an institution environment is mostly opaque and direct. The company’s productivity has been boosted by 20-30% through the use of Lean operation techniques. In addition to that, the company has experienced improvement in cycle time in all its dimensions of infrastructure delivery through rework elimination, segmenting client’s requests by order of complexity and increasing the period of task for principal resources. McKinney being an infrastructure organization is in dire need of tapping investments, vendor scale and capability. The company uses infrastructure 360 as a methodology for establishing infrastructures capability of an organization. In addition to that, the infrastructure is used to identify the company’s specific opportunities for purposes of improving quality and cost of performance. Application developers and business users expect infrastructure to increasingly provide services that are integrated, with incident-management and provisioning processes that encompasses the domains of traditional technology such as, mainframes, storage, networks and end users devices. As such, McKinsey & company is not an exception. Technology Technology has an extremely critical role in the success of a company supply chain management. The use of web-based software in supply chain has drastically changed the management of supply chain in numerous contemporary companies (Vratimos, Gove and Bovet, 2005, p. 35). Being a consulting firm that aims at solving senior management problems in big companies, Mckinsey & Company has greatly benefited from soft ware application in their supply chain management. Before the introduction the internet services in the company, the supply chain management and operations of Mckinsey & Company was exceptionally problematic because the company was limited from receiving feedbacks or set updates in a timely manner. On the other hand, Mckinsey & Company was restricted its ability to interact and work with global partners due to the setback of time differences and language barriers. The use of internet technology in the company’s communication and procurement in supply chain management has fastened the company data exchange as well as operation of supply chain (Vratimos, Gove and Bovet, 2005, p. 35). Mckinsey & Company rely on internet technology in linking and collaborating with other international companies. This collaboration is designed to facilitate mutual benefit to all involved parties. The company utilizes internet applications in linking with potential customers globally. The company new services are posted automatically on the company’s websites for easy access by customers. This has condensed physical booking which was exceedingly costly and time consuming. The company’s website is also designed to accommodate many requests and orders from a significant number of the company’s customer. The technologies have also reduces constraints associated with delays in responding to the customer’s request as well as reacting to customers feedback. The use of modern internet technology has also enabled the company to receive immediate customers’ feedback and reaction to the services. As a result of the adoption of internet technology in global collaboration, the company has tremendously increases its efficiency in its supply chain as well as its profit. Additionally, the company has adopted technology that will reduce ineffectiveness and cost at all levels of supply chain. The technology has also reduced the time which was initially used in planning for consultation (Vratimos, Gove and Bovet, 2005, p. 35). On the other hand, Mckinsey & Company conduct some of its global researches through online services. Researchers sends questionnaire though online services to their target samples. The online research technology is extremely critical in informing the customer about the quality of their research findings and analysis. At present, Mckinsey & company management is working on an operational research which entails the development of a functional database where over one hundred high profile companies will be allowed to participate. This online research is aimed at modifying the company supply chain management to meet the global customers need. Additionally, the company relies on modern technology in the promotion of their supply services global customers. The adoption of online promotion services has radically increased the company’s global market. Performance assessment metrics Performance assessment metric entails assessing the organization’s performance and activities (Marshall 1997, P.115). The assessment also evaluated the impact of the organization performance to the organization, customers, employees, and other involved stakeholders (O’marah and Debra 2010, p. 16). Action, quality, cost, time, scope, and resources are the main criteria used in performance assessment metric. Performance assessment metrics is relatively useful in future planning and decision making process. Mckinsey & company assess its supply chain performance though conducting quarterly performance assessment metric. In assessing the performance of its supply chain, the supplies management works closely with all involved players to understand the organization objectives and what the chain has attained over a certain period of time. In its assessment process, the company administration conducts detailed evaluation of the current supply chain performance through identifying the weak and strong areas of the supply chain. After identification of weak and strong areas, the management proposes the strategies which are required for improvement (O’marah and Debra 2010, p. 16). In the assessment of the performance of the supply chain, Mckinsey & company examines the supply chain cost. According to the goals set by the company, the supplies cost need to be as limited as possible to improve the organization profitability. In the situation of high cost in supply chain, the performance of the supply chain is deemed to be poor. Additionally, the assessors evaluate the time spent in supplying the services to customers. The core aim of the organization is to ensure they minimize the time spent in delivering their services to their customers. The value of the services to the company’s customers is also very crucial in assessing the company supply chain performance. The value of their supply chain is examined by the number of positive recommendations received by the company from clients. The efficiency of the technology used in supply chain is also examined in the assessment of the performance of the company supply chain. The effectiveness of the technology introduced in the supply is accessed on the bases of cost reduction and time spent in the supply chain (O’marah and Debra 2010, p. 16). Process of Mckinsey & Company Supply Chain The process of supply chain is the network of connection between a company and its ultimate customers. It has to do with the procedure followed in the provision of the services and products to the end customers in the supply chain (Marshall 1997, P.119). Mckinsey &company have a well defined process of supplying its services to its potential customers. The company utilizes unique functional proficiency in assisting the clients in addressing the supply challenges. The company core purpose is to offers advice to clients on the best ways of coping with the market supply and demand uncertainty. To offer these services, the company organizes either online interaction or physical contact. The method of interaction depends on the customers’ desire and location proximity. The company also conducts a follow up exercise to access the impact of their services to their customers. During the intervention, the company proposes the most excellent strategies to employ in addressing the challenges of supply and demand uncertainty (Marshall 1997, P.119). The company has also opened up connection avenues in the areas where they have huge number of customers. This helps in catering for customers who cannot access online services. To enhance the quality of their services to their customers, the company conducts frequent researches in different business fields. The nature of the research depends on the demands in the market To make their supply process effective, the company has streamlined all the supply chain steps. The company works with marketing sales, pricing, and distribution department in ensuring their services are easily accessed by the company customers. All departments in the organization are integrated to meet the needs of the customers. The company also applies their principles differently to various sectors. To be effective in this, the company has changed from old fashion of service supply to electronic models, and from using agents in their supply chain to use of online services in their work (Marshall 1997, P.119). The best DNA for Mckinsey & Company Supply Chain DNA is the company belief system. It also incorporates the manner in which people in an organization interact with one another in the company, interaction between organization and the customer, and business ethics (Lee 2002, p.65). The way in which an organization reacts to prevailing opportunities and weaknesses define it’s DNA. There are some companies which are resistant to change while others accept changes as it come. The company’s culture directs the development and changes in an organization. Currently, Mckinsey & company have a very effective DNA in it supply chain. It has incorporated all plays in their service delivery. To be in a position to cope with modern development, Mckinsey &company ought to modify some of its DNA aspects. The company should employ DNA aspects that will accommodate the demands and interests of all involved players equally. Instead of relying purely on internet service in interacting with its customers, the company should open up branches all over the world to enhance physical contact between the company administrators and customers. The company is supposed to embrace DNA which facilitates immediate accommodation of emerging changes in the company. Due to the dynamic nature of the modern market, adoption of a DNA that will accommodate instant changes is exceedingly imperative. On the other hand, DNA facets that will accommodate each participant ideas and opinion are incredibly relevant for the company. All stakeholders participation will enrich the entire decision making process with new ideas and thoughts that can be useful for future development of the supply chain (Lee 2002, p.65). Direct interaction between the Mckinsey & company and its customers in market supply will facilitate immediate and direct feedback of their services. It is will also give customers a chance to air their complaints and opinions directly to the relevant authority. For Mckinsey & company to be in a better position to cope with the changes in the modern market, the flexibility of the organization in accommodating new ideas and opinions is relatively decisive. Adoption of modern technology will considerably improve the company service delivery to its customers (Lee 2002, p.65). Bibliography Marshall, F. (1997). What is the right supply chain for your products? Harvard Business Review, Vol.75, no.45, 105-116. Karlof, B. (1993). Key Business Concepts: A concise guide, Routledge, Taylor & Francis Group. Lee H., (2002). Managing supply chain inventory: pitfalls and opportunities. Sloan Management Journals, vol.19, no.92, 65-73 McKinsey & Company. Viewed 11 June, 2012 from< http://www.mckinsey.com.br/> O’marah,K. and Debra, H. (2010).The AMR supply chain for 2010. Garter Japan Journals, Vol 21, no. 25-25 Richards, R. (2009). 7-S Model: A managerial tool for analyzing and improving organizations. Viewed 11 June, 2012 from Singh, M. (2005). Supply Chain Reality Check. MIT Sloan Management Review, p.96-96 Sodhi, M.S. (2003).How to do strategic supply-chain management. MIT Sloan Management Review, Vol.45, no.1, p.69-75 Vratimos, E., Gove J., and Bovet, D. (2005). Just in case: Balancing risk and return in global supply chains. Mercer Management Journals, Vol.4, no.5, 1-40. Read More